Government’s ‘troubled families’ programme is failing; we knew it would

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[Image: historyextra.com]

Remember back in April last year, when Vox Political said the Coalition government’s plan to stop children in ‘troubled’ families from playing truant, while finding work for the adults and stopping both from committing crime, was doomed to failure?

If you don’t, it’s not surprising (our readership back then was around a quarter of its current level) – and you haven’t missed much, because the scheme is back in the news as it is (again, unsurprisingly) failing.

The VP article pointed out that the government had been fiddling the figures in its bid to make it seem that 120,000 such families exist in the UK; in fact, “the number came from Labour research on disadvantaged families with multiple and complex needs, rather than families that caused problems,” according to ‘trouble families tsar’ Louise Casey at the time.

The article pointed out that local councils, offered a £4,000 bonus for each ‘troubled’ family they identified and helped (for want of a better word) were shoehorning families into the scheme – whether they qualified or not – just to make up the numbers.

It was doomed from the start.

So today we have figures obtained by Labour’s Hilary Benn, showing that around 106,500 families have been identified for the scheme (according to averages worked out from councils that responded to a Freedom of Information request). Of these, only around 35,500 were engaged by the scheme, which then failed in three-quarters of cases (around 26,600 families).

That leaves 8,878 families who actually came back to the straight-and-narrow – less than one-thirteenth of the target figure.

A success rate this low could have been achieved if the government had done nothing.

(That seems to be a running theme with the Coalition. What else does it remind us of? Ah, yes… The Work Programme. In this context it is extremely interesting that Mr Benn said the biggest obstruction to the scheme was the Work Programme’s failure “to deliver jobs to the poorest people in society”.)

According to The Guardian, “Data from 133 councils out of the 152 participating in the scheme found that almost one in seven families that had been “turned around” were either still on drugs, had children missing from school or involved in criminal acts.

“Another 60 per cent of households deemed to have been successfully helped by the scheme in March still had adults on unemployment benefits after leaving the programme.”

Bearing in mind the £4,000 ‘carrot’ that was waved in front of councils as encouragement for them to take part, you’ll enjoy the revelation that each local authority claimed to have found an average of 812 troubled families – 20 per cent more than central government had estimated.

Again, this is hardly surprising. Government-imposed council tax freezes have starved local authorities of money and £4,000, multiplied by 812, brings an average of £3,250,000 into each local authority that they would not, otherwise, have had.

So much for David Cameron’s plan to “heal the scars of the broken society”.

The Guardian also tells us that the ‘troubled families’ programme was launched by Cameron as a Big Society (remember that?) response to the riots of summer 2011.

In fact it doesn’t matter what the Coalition government does – or, indeed, what Labour plans to do if that party comes into office in 2015; schemes that are imposed on people from above will never succeed.

The problem is that the United Kingdom has become an increasingly unequal society, with money and privilege bled out of the majority of the population (who do most of the work for it) and into the hands of a very small number who have power and – it seems – no responsibility at all.

The vast majority of us are seen as disposable commodities by these exploiters – whose number includes a large proportion of MPs with interests in private business; they use us to make their huge profits and then throw us into unemployment.

Is it any wonder that such betrayal breeds families that turn away from the system and take to crime instead?

When David Cameron slithered into Downing Street he said he wanted to “re-balance” society. In fact, he over-balanced it even more in favour of privilege and wealth.

Now we need a proper re-balancing of society. The only way to solve the problem of ‘troubled families’ – a problem said to cost us £9 billion every year, by the way – is for people to be born into a society where everybody is valued and receives a fair (in the dictionary sense of the term, rather than the Conservative Party definition) reward for their contribution.

That will mean a fundamental shift in attitudes that should be taught to everybody from the cradle upwards.

You won’t get it under the Conservatives or any other right-wing government because they are exploiters by definition.

Will you get it under Labour?

Possibly. But a lot of right-wing Blairite dead wood will have to be cleared out first, and Hilary Benn is not the man his father was.

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Cameron’s ‘mission’ is morally bankrupt

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When David Cameron stands up in all his hypocrisy and tells you that tearing apart the basic safety net that guaranteed people would not be left in hunger or destitution is part of his “moral mission”, even die-hard Tories should agree that the country has taken a turn for the worse.

When he defends an administration that has become so punitive that applicants who don’t get it right have to wait without food for months at a time, by claiming he is doing “what is right”, even die-hard Tories should agree that the man who claims he is Prime Minister has diverged from reality.

That is precisely what he has done, and you can bet that the Tory diehards will quietly go along with it because they think it is far better for other people to lose their lives than it is for their government to lose face.

Cameron has been responding after the Catholic Bishop of Westminster, Vincent Nichols, delivered a vehement attack on the social security “reforms” being forced on the country’s most vulnerable people by Iain Duncan Smith.

In the Daily Telegraph, Cameron smarmed: “Our long-term economic plan for Britain is not just about doing what we can afford, it is also about doing what is right… Nowhere is that more true than in welfare. For me the moral case for welfare reform is every bit as important as making the numbers add up.

“We are in the middle of a long and difficult journey turning our country around,” Cameron said. “That means difficult decisions to get our deficit down, making sure that the debts of this generation are not our children’s to inherit.

“But our welfare reforms go beyond that alone – they are about giving new purpose, new opportunity, new hope – and yes, new responsibility to people who had previously been written off with no chance.

“Seeing these reforms through is at the heart of our long-term economic plan – and it is at the heart too of our social and moral mission in politics today.”

Drivel. Any evidence-based analysis will find the exact opposite. Where are the opportunities in Workfare schemes that pay only benefits, meaning travel expenses alone put claimants out of pocket, and then send jobseekers back to the dole queue so rich companies can profit further by taking on more claimants on the same terms?

How can anyone derive hope from taking responsibility for their job search, when DWP staff at Jobcentre Plus are ordered to ignore their own responsibilities in favour of harsh sanctions for invented infringements of the Jobseeker’s Agreement?

And how is encouraging people to say they are self-employed, even though they have little chance of earning enough to support them and none of enjoying a holiday or a pension, different from writing them off with no chance?

Look at the new employment figures from the Office for National Statistics – the Coalition government has been making a song and dance about them ever since they came out. On the face of it, they seem reliable: In December 2013, 30.15 million people were in work of some kind, up by 396,000 from the same time the previous year; there were 2.34 million unemployed, down 161,000 from December 2012; and the Claimant Count (those on Jobseekers’ Allowance) was 1.22 million in January, down 327,000 from a year earlier.

However, the number of people marked as self-employed has rocketed to a record level, totalling one in seven of the workforce. That’s 4,370,000 – up 150,000 on the previous year. This is extremely suspicious, as the increase in the previous year totalled 25,000 – just one-sixth of this week’s figure.

Some of these people might be genuinely self-employed and making their new business work – but all of them? In an economy where productivity hasn’t increased since the Coalition took office? You’d have to be stupid to believe that.

Assuming the amount of real self-employment has increased in line with economic growth (at 1.9 per cent), that’s an extra 25,475 in 2013, leaving 124,525 in limbo. Are these really self-employed? Or were they told by Jobcentre advisors to say so and claim working tax credits (as we’ve seen in the past), leading to a huge debt when HMRC tells them they have been claiming fraudulently and have been overpaid?

How many of the unemployed have been wiped off the books due to sanctions? We don’t know, because we don’t have figures up to December 2013. We do know that 897,690 sanctions were enforced in the year to September 2013. We don’t know how many were for one month, how many for three months or how many for three years, but we do know that the rate was six per cent of jobseekers per month in the three months to the end of September 2013. Assuming that rate stayed solid, it suggests that 73,200 were off-benefit due to sanctions in December and should be added to the Claimant Count to give a more accurate figure.

How many of the unemployed have been wiped off the books due to Workfare? We don’t know. How many are unemployed but on Universal Credit, which isn’t included in the Claimant Count? We don’t know – 3,610 were on it at the end of November last year, but the DWP has not divided them into those in work and those without.

David Cameron has access to all of this information, and he doesn’t care. He also has access to the mortality figures for claimants of Incapacity Benefit/Employment and Support Allowance, that the DWP has been withholding from the rest of us, probably for fear of sparking an international outcry. He doesn’t care about that either.

His comments are therefore doubly outrageous – not only is he claiming that his Coalition’s changes are having a beneficial effect when the figures demonstrate the opposite, but he is also claiming the moral high ground when his actions are more appropriate to the populace of the Pit.

In terms of his morality, there can be only one description for him and his cronies:

Bankrupt.

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More mistakes in the script? Correcting Cameron’s New Year speech

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David Cameron’s New Year message – what a disgrace!

Standing uncomfortably in an empty factory (one presumes the workers were all on part-time contracts to save bosses money in holiday pay and national insurance), the comedy Prime Minister looked nervous as he reeled off a list of statements the Conservative Party wants the proles to believe, going into 2014.

What a shame his words were so easy to debunk.

If you can bear to hear it, play the video (above). I did, and wrote the following response in real time – as his speech was taking place. Then I sent it to his Facebook page. Here are my words:

“Mr Cameron,

“When you weren’t elected into office, the economy was on the up – and your policies killed it stone dead for three years. You haven’t cut the deficit significantly for years (it’s been stuck at £120 billion or thereabouts). You have cut income tax for the super-rich; raising the tax allowance for the poor (which you claim is a cut) means they don’t pay National Insurance (if anybody hadn’t noticed) and it will take them longer to qualify for retirement pension.

“You only decided to cut fuel duty because Labour came out with a better policy – and nobody was fooled by your choice.

“The jobs created under your government are part-time, zero-hours, or fake ‘self-employed’ in which the worker is contracted to larger companies and receives lower-than-minimum-wages for the amount of time spent. Stop talking nonsense about ‘jobs taxes’ – all this does is show that you do not understand the principles behind National Insurance.

“How many people did your ‘welfare’ work kill last year? We don’t know because your Department for Work and Pensions is terrified that releasing the figures will cause a national scandal.

“As for your immigration policy – apart from the tangential tightening of monitoring around the minimum wage, all your new measures are already enshrined in law; you have created phantom solutions to a phantom problem.

“Building an economy for people who work hard and “play by the rules”, is it? There’s a new condition in there, and people should be warned that your rules are not intended to benefit hard-working people but to free their employers from any responsibility towards those who generate their bloated salaries for them.

“I’m surprised you didn’t choke on your comments about education, after the fiasco that has led to the closure of one free school and special measures for several others.

“As far as the Scottish referendum is concerned, if any government, through its policies, could do more to push an entire country out of the United Kingdom, I don’t see how.

“I look forward to your response on the welfare deaths. In 2011 they stood at 73 per week, which was a scandal at the time. New figures will show whether you have been merely misguided or intentionally genocidal.

“Happy New Year? It will be a lot happier if you and your entire Parliamentary party resigned. How many of them know anything about struggling to make ends meet, in debt and in a place where there are no jobs to be had?

“You know nothing about hard work.”

Did anyone else notice he said nothing about the National Health Service, that his government has brought down from its most popular and efficient moment ever – slandering it and legislating to ensure private profit-driven firms could get into it, turning it away from healthcare and into money generation?

If ever there was a time to fight back for our cherished publicly-funded institutions, it is now.

That is the real message we should take from this soulless mouthpiece and his empty words.

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The State of Osborne: a visitor’s guide

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A moment of crisis for David Cameron as he realises it is unlikely that George Osborne has the faintest idea what the Autumn Statement means.

If anybody else had prattled on for 50 minutes while hardly uttering a single sensible word, they would have been consigned to a mental hospital forthwith.

But this is Coalition Britain, and the speaker was George Osborne, the man who likes to tell us all that he is in charge of the nation’s finances. Thanks to his government’s Department for Work and Pensions, nobody is allowed to have mental illnesses anymore; after this speech, it seems likely we all have an idea about the reason for that.

A 50-minute speech is a lot of verbiage, and it is certain that worthier journalists across Britain – if not the world – have already analysed it to exhaustion. Allow me to let you into a secret:

They’re probably trying too hard.

Most of the speech was about putting Labour down. The Opposition has made all the headway over the past few weeks, and we all knew Osborne was under orders to change the mood music of the nation in time for Christmas.

Did he manage it? Not really. His speeches always come across as strained events, where he’s making an effort to be clever without ever achieving it. As a result, the message gets lost. We can therefore discount the Labour-bashing.

That leaves us with what he actually said. Even here, his meaning was at times opaque. What follows is an attempt to provide a handy guide to George-speak, for anyone unfortunate enough to have heard him yesterday.

Osborne: “We have held our nerve while those who predicted there would be no growth until we turned the spending taps back on have been proved comprehensively wrong.”/Meaning: “I am lying. Austerity failed miserably and the economy flatlined. A few months ago I realised that we would have nothing to show at election time so I turned the spending taps back on, with Help To Buy and Funding For Lending. I know that these are exactly the sort of Keynesian economic levers that I preached against for three years but I’m hoping that nobody noticed.”

The hard work of the British people is paying off, and we will not squander their efforts./Osborne appears to be celebrating his three years of stagnation. He inherited growth and decided to trash it. (MagsNews on Twitter)

There was no double-dip recession./“Phew! Lucky escape there!”

At the time of the Budget in March, the Office of Budget Responsibility forecast that growth this year would be 0.6 per cent. Today, it more than doubles that forecast and the estimate for growth will be 1.4 per cent./“Please God don’t let anybody remember that three years ago, the forecast for this year was 2.9 per cent.”

Today in Britain, employment is at an all-time high… We have the lowest proportion of workless households for 17 years./These jobs have increased the numbers of the working poor. Too few are full-time; too many are part-time, zero-hours or self-employed, serving up no National Insurance contributions from employers, no holiday or sick pay, or making contractors work long hours for less than the minimum wage.

The number of people claiming unemployment benefit has fallen by more than 200,000 in the past six months—the largest such fall for 16 years./“And we have imposed sanctions on more people on Jobseekers’ Allowance than ever before, in order to produce that figure.”

By 2018-19, on this measure, the OBR does not expect a deficit at all. Instead, it expects Britain to run a small surplus. These numbers mean that the Government will meet their fiscal mandate to bring the structural current budget into balance and meet it one year early./Although of course the books were initially supposed to be balanced by 2015. (Huffington Post live blog)

This year, we will borrow £111 billion, which is £9 billion less than was feared in March./…and £41 billion more than forecast in 2010.

We will cap overall welfare spending./But this will not include the state pension (half the social security budget) or the most cyclical jobseeker benefits./”A living wage would mean less dosh on in-work benefits; letting councils build would mean less subsidies for private landlords.” (Owen Jones on Twitter)

Pensioners will be more than £800 better off every year./But as usual he’s ignoring the VAT elephant in the room. (Mark Ferguson on Twitter)

We think that a fair principle is that, as now, people should expect to spend up to a third of their adult lives in retirement. Based on the latest life expectancy figures, applying that principle would mean an increase in the state pension age to 68 in the mid-2030s and to 69 in the late 2040s./But life expectancy depends on where you live and how much money you have, meaning the poor continue to pay more towards the pensions of the rich./”Current pensioners better off – future pensioners paying for it. What was that about “making our kids pay for current spending” George?” (Mark Ferguson of LabourList on Twitter)

Most wealthy people pay their taxes and make a huge contribution to funding our public services; the latest figures show that 30 per cent of all income tax is paid by just one per cent of taxpayers./Estimates of the amount of tax that is not collected range between £25-£120 billion per year and it is not the poor who aren’t paying up.

This year the rich pay a greater share of the nation’s income taxes than was the case in any year under the last Labour Government./Because they now have more income. Simple really. (Tom Clark of The Guardian, on Twitter)

Today we set out in detail the largest package of measures to tackle tax avoidance, tax evasion, fraud and error so far this Parliament. Together it will raise over £9 billion over the next five years./Including capital gains tax for foreign investors on sales of UK property, which has nothing to do with tax avoidance/evasion, fraud or error.

We must confront this simple truth: if we want more people to own a home, we have to build more homes… The latest survey data showed residential construction growing at its fastest rate for a decade./The rate of house building is at its lowest peacetime level since the 1920s

This autumn statement has found the financial resources to fund the expansion of free school meals to all school children in reception, year 1 and year 2, announced by the Deputy Prime Minister and supported by me./On Wednesday, the Lib Dems and Michael Gove’s education department argued over who had to pay for it.

Extra funding will be provided to science, technology, and engineering courses [in universities]. The new loans will be financed by selling the old student loan book, allowing thousands more to achieve their potential./And pushing thousands into the hands of debt collectors.

The best way to help business is by lowering the burden of tax. KPMG’s report last week confirmed for the second year running that Britain has the most competitive business tax system in the world./KPMG would know – it writes the tax system and also runs some of the larger tax avoidance schemes.

From April 2015 we will introduce a new transferable tax allowance for married couples… Four million families will benefit, many of them among the poorest working families in our country./Osborne says the Tories are backing British Families – but only ones who are married it seems. (Mark Ferguson on Twitter)/While the new tax arrangements bribe families to marry, the benefit cap will bribe big families to split up. (Tom Clark on Twitter)

We are all in this together./The biggest lie of this Parliament.

We are also helping families with their energy bills./Commence the cutting of the “green crap”. This from the “Greenest government ever”. (Mark Ferguson on Twitter)

Next year’s fuel duty rise will be cancelled./This is a cut in a tax that was never imposed in the first place.

We are going to abolish the jobs tax on young people under the age of 21. Employer national insurance contributions will be removed altogether on a million and a half jobs for young people./Young people will therefore have less chance to get contribution-based benefit. National Insurance assures people their pension contributions – except when it isn’t paid. So they will have no contributions to show for any years they worked before 21 and will have to work until their late 60s.

The cost for a business of employing a young person on a salary of £12,000 will fall by over £500./This is a bonus for businesses, not employees.

“Jobs tax” – it’s ludicrous, isn’t it? National Insurance has been a respected part of British life for more than 100 years but Osborne, living as he does in a mythical Victorian-era golden age that never actually existed, thinks it is a “jobs tax”. Either that or he’s still bruised by the fact that Labour’s labelling of the under-occupation charge as a Bedroom Tax caught on with the public.

Shadow Chancellor Ed Balls got on his feet and immediately attacked Osborne’s “breathtaking complacency” for denying the drop in living standards faced by everyone in the country, with families already £1,600 per year worse off. Osborne laughed. He thought that was funny.

The Shadow Chancellor pointed out that we are enduring the slowest recovery in a century, and that average real wages will have dropped by 5.8 per cent by the end of the Parliament (except for fatcat business bosses).

He was having a hard time getting his points across, however, because Tory MPs were heckling him very loudly. Owen Jones tweeted, appositely, “Do the Tories think that a bunch of braying MPs dripping with privilege, while ordinary people’s living standards crash, is good TV?”

Maybe they did. Maybe they thought they had the public on their side.

Let’s have a look at a few comments from the public – courtesy of the Huffington Post:

“Planning to kill more people, George?” (Robin Stacey)

“Spend more you wet lipped monkey.” (Will Moriarty)

“No one has an ounce of faith in anything you say, you parasitic pool of curdled warthog’s puke.” (Anthony Nicholas)

And finally: “Hope you end the speech with your resignation x” (Joanne Wood – and yes, she did mean to end with a kiss).

What a shame Osborne did not follow her advice.

 

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The Magical Land of Os(borne) – fantasy economics

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George Osborne’s claim that his nonsense policies have magically turned the economy around, coupled with his equally-preposterous claim that the UK needs another seven years of austerity before he can balance the books – provides a fine example of the duality at the heart of Conservative economic policy.

He needs to convince you that his choices have made a difference and the nation’s fortunes are changing, but he also need to convince you that we’re in a terrible mess – or he won’t have an excuse to continue cutting more public services and selling them into the private sector so his rich friends can use them to fleece you.

The two claims are not only contradictory of each other – they are self-contradictory. The evidence shows that Osborne’s policies delayed the recovery, rather than encouraging it, and the ‘Starve The Beast’ plan he cribbed from George W Bush has long been recognised as harmful to any country’s economic health; by cutting services he is starving the economy of the liquidity that is its lifeblood.

(This is a point worth remembering: Whenever a TV news reporter says Osborne or the government want to make cuts in order to “save” money, they mean the government will be “taking money out of the economy” – which will consequently be worth less. As a result, some people will have to become poorer. Can you guess who?)

Before we congratulate Osborne in ways that are anything like as effusive as David Cameron’s endorsement earlier this week, let’s look at the facts: According to Martin Wolf in the Financial Times, in three and a half years, the UK’s economic performance has improved by just 2.2 per cent – against a prediction of 8.2 per cent by his pet Office of Budget (Ir)Responsibility. In the second quarter of 2013, Gross Domestic Product was 3.3 per cent below its pre-crisis peak and 18 per cent below its 1980-2007 trend, making this the slowest British recovery on record.

Osborne and the Conservatives point proudly to the strong increase in private-sector jobs but, as Mr Wolf states, “this is hardly something to boast about”. While employment – on paper – is at an all-time high, productivity has fallen back to the level it reached in 2005. What does this say about the quality of the jobs that are being filled? Are they high-quality, long-term, well-paid careers, or are they part-time, zero-hours, throwaway fillers? We all know the answer to that. Average wages have been cut by nine per cent, in real terms, since 2010 – and they are still falling.

Even by the standards of other crisis-hit, high-income economies, the UK’s performance has been dismal, says Mr Wolf, pointing to work by Spencer Dale and James Talbot of the Bank of England. This indicates that the Eurozone has performed just as badly – but the difference is that the Eurozone countries do not have control of every economic lever that is available to them; Britain does.

Osborne claims that high global inflation and the performance of the Eurozone have impacted on the UK; Mr Wolf’s assertion is that austerity is the reason for this disappointment – and Osborne was just as much a cheerleader for austerity in Europe as he has been for it in the UK. Furthermore, as the Labour Party pointed out in its report, “David Cameron’s out of touch, you’re out of pocket” (2013), inflation in other G7 countries has been lower than in the UK, indicating that high global prices have little to do with the problem.

“Yes, but,” says Osborne, “austerity has kept interest rates down.” Did it? Did it really? In that case, interest rates would have been kept low because of the promise (in 2010) that borrowing would be brought down by 2015. When the Coalition came to power, Osborne said he expected to borrow a total of £322 billion by 2015. In March this year, that figure had risen to £564 billion – an increase of 75 per cent! Meanwhile the deadline for the national debt to start falling has slipped from 2014-15 back to 2017-18 and the level at which the debt was expected to hit its peak has jumped from 70.3 per cent of GDP to 85.6 per cent. The deficit has been stuck at £120 billion a year for the last two financial years, despite the repeated claims that it has been cut by one-third. None of this has affected long-term interest rates and neither did the loss of the UK’s AAA credit rating in February this year.

Here’s why – as explained in an article on this site in June:

As Professor Malcolm Sawyer notes in Fiscal Austerity: The ‘cure’ which makes the patient worse (Centre for Labour and Social Studies, May 2012), “It is well-known that a government can always service debt provided that it is denominated in its own currency. At the limit the UK government can ‘print the money’ in order to service the debt: this would not take form of literally ‘printing money’ but rather the Central Bank being a willing purchaser of government debt in exchange for money.” This is what is happening at the moment. Our debt is in UK pounds, and we can always service it. Our creditors know that, so they remain happy to continue financing it.

“With interest rates at the zero bound, austerity weakened the economy relative to what might otherwise have happened,” wrote Mr Wolf.

“Nobody thought recovery would never happen under austerity, merely that it would be damagingly delayed… This has been an unnecessarily protracted slump. It is good that recovery is here, though it is far too soon to tell its quality and durability. But this does not justify what remains a large unforced error.”

Looking to the future, Osborne has reacted to the new barrage of Labour policies, all of which have been carefully costed against savings in current budget areas, with a series of rushed measures that are entirely unfunded. Remember that, next time a Conservative accuses Labour of borrowing and spending!

The married couples’ allowance, worth less than £4 per week (and less than £2 if you’re on a low income) is unfunded. The promised fuel duty freeze is unfunded. These will cost more than £2 billion and no source has been identified.

And what about the £12 billion stage two of the housing ‘Help to Buy’ scheme, that Osborne rushed forward to this month?

He has pulled £14 billion out of nowhere, but still expects us to believe he will resume his stalled deficit cuts by £35 billion by 2015, £42 billion by 2017-18 and £43 billion by 2020, in order to create a budget surplus.

All the while, he is promising “improved living standards for this generation and the next”. For whom? These cuts must come from somewhere, and they mean removing a cumulative total of £120 billion from the economy each year by 2020. That has to come from somewhere.

Look at the amount by which bosses’ pay in FTSE100 companies has increased in the last three years – 32 per cent, while average worker pay has dropped by nine per cent.

Do you really think the “Have-yachts” will be paying for these cuts?

Further reading: George Osborne’s credibility gap (Alistair Darling, Guardian)

Have the Tories taken leave of their senses? (Michael Meacher, blog article)

From the DWP to the economy – the Coalition’s growing credibility chasm (Vox Political, June 2, 2013)

Treasury responds to Vox’s austerity challenge (Vox Political, May 13, 2013)

Another Tory ‘bait-and-switch’ scam – shares-for-rights scheme is employers’ tax dodge

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“This government is taking action domestically on [tax] avoidance and evasion,” wrote George Osborne in an article for The Observer, back in February. How right he was.

The Tory-led Coalition has done everything in its power to facilitate tax avoidance and ignore evasion, it seems, including the latest wheeze, which is to link it with a feeble attempt to get working people to throw away their rights in exchange for a few shares.

The BBC has reported that the new status of “employee shareholder” has come into force, allowing working people to claim shares in the company that employs them, if they give up the rights to claim unfair dismissal and statutory redundancy pay, the right to request flexible working (except in the case of two weeks’ parental leave), and some rights to request time off for training.

Nobody in their right mind would do this and expert opinion is that take-up will be small. So why do it?

Well, it’s not about the workers at all. It’s about helping company bosses avoid paying their taxes. Even the right-wing-leaning BBC was unable to cover up the facts (although it left them until the end of the article):

“Companies can also claim some corporation tax deductions on the issuance of shares to employees.”

Yes – it’s a tax dodge!

Here’s how it works, according to the Mirror: “New analysis show[s] it could also allow executives to avoid paying revenue on company shares. Tax experts commissioned by the TUC believe ruthless bosses could classify themselves as ’employee owners’ to escape Capital Gains Tax. And the Office for Budget Responsibility estimates the scheme could cost up to £1 billion, mainly due to tax avoidance.”

This will, of course, involve a drop in tax income to the Treasury, meaning increases in the national debt and deficit, which the Tories will no doubt use to justify further cuts to public service budgets as part of their ‘Starve The Beast’ agenda. Remember, this country has a chancellor who, for ideological purposes, actually wants to harm the British economy.

Meanwhile, as our friend at Another Angry Voice has put it: “If you’re thick enough to cash in your labour rights for a few grand worth of shares in the company you work for, then in a couple of years time when people are calling you ‘feckless’ for being unemployed, you’ll be one of the minority that actually deserve it (and your shares might well be worth only pennies in the pound compared to the value they had when you scrapped your labour rights to get them).”

UK Treasury changes title to ‘Department of Clutching At Straws’

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The economy is growing: The Coalition government will claim credit but there is no reason to believe it has anything to do with current government policy – quite the opposite, in fact.

All right, the Treasury hasn’t really changed its name – but it might as well have, after the joy that greated this week’s meagre growth figures.

The Office for National Statistics is reporting growth in construction, manufacturing, services and agriculture in an estimate based on 44 per cent of actual data on economic activity during the second quarter of 2013 (April-June). That’s less than half of the evidence.

We live in times when the whole of the evidence means a great deal – for example, information on Q1 of 2012 that put growth at a standstill – neither up nor down – meant the UK did not enter a double-dip recession, even though the economy contracted in the periods immediately before and after. In real terms we were backtracking – but on paper, no.

Let’s remember, also, that the organisations that record our economic fortunes are liable to revise their predictions down as well as up – remember when the Office of Budget Irresponsibility changed its mind about the growth figures for 2012? It had predicted growth of 2.5 per cent for that year. In fact, once we iron out the ups and downs, the economy really only bumped along at a roughly steady state.

The International Monetary Fund had predicted a more conservative 1.6 per cent growth for 2012 – but in January of that year revised this down to 0.6 per cent. You get the picture.

The 0.6 per cent figure was in line with market expectations, though – and that is a good sign. But 0.6 per cent is a very fragile figure and the prospects for the rest of the year are “highly uncertain”, as market analyst Richard Driver said in the BBC News website’s report.

We all knew that the economy would start turning upwards again at some point. That it has taken five years to do so indicates the severity of the banker-induced crash – and also the lack of any investment in recovery.

In the past, the upturns arrived comparatively swiftly – but there had been a willingness on the part of both government and businesses to put money into it. The current government has been sucking money out of the economy in the pursuit of Gideon‘s nonsensical “expansionary fiscal contraction” and getting the deficit down – meaning that all the effort has been put into cutting spending and none into actually making a buck or two. Meanwhile, it has been estimated that businesses have been sitting on fortunes totalling six or seven per cent of GDP – around £775 billion, according to Michael Meacher.

In his blog, Mr Meacher said he expected the announcement to be “milked by Cameron-Osborne for all it’s worth” and he was not to be disappointed.

“These figures are better than forecast,” said Osborne in the BBC report – claiming credit for something that had nothing to do with him. “Britain is holding its nerve, we are sticking to our plan, and the British economy is on the mend – but there is still a long way to go.”

What will he say if a later revision knocks the figure down again?

Mr Meacher’s blog stated that the growth figures had been inflated “by being talked up by the finance sector”, and stimulated by Osborne’s Help to Buy scheme “which has ploughed taxpayers’ money into mortgages but without increasing the number of houses being built, which can only push up property prices… igniting yet another housing bubble which is the last thing the economy needs”.

He added that the real essentials of recovery are still missing – “an expansion of manufacturing and exports”.

We may have to wait for another government before that happens; the Coalition is too busy exploiting our current economic fragility as an excuse to sell off the family silver – those parts of the NHS it thinks nobody will notice, the Royal Mail, school playing fields, student loans…

I could mention ‘Starve the Beast’ again – but by now you should be on intimate terms with that expression.

(The first Vox Political collection, Strong Words and Hard Times, is now available and may be ordered from this website)

Osborne update: Standards commissioner ignores the facts

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Oily Osborne has slithered away from any chance of a fraud investigation by the standards commissioner, but he will have to live with the allegation for the rest of his career.

I believe I am one of many who received an email from the office of the Parliamentary Commissioner for Standards yesterday, turning down the call for an inquiry into possible expenses fraud by the Chancellor of the Exchequer.

Those of you who received it will be familiar with the wording. For those who didn’t, the relevant parts run as follows:

“The Commissioner has not accepted a complaint about Rt Hon George Osborne MP. There is therefore no current inquiry into Mr Osborne’s conduct.   “As you know, before she could inquire into allegations against a Member, the Commissioner would need evidence, sufficient to support an inquiry, that the Member might have breached the Code of Conduct and the rules of the House. The rules on Members’ overnight expenses have been tightened considerably since Mr Osborne’s original expenses claims, and the Commissioner would assess the allegations against the rules as they were at the time of the alleged conduct. Without evidence of a breach of those rules, which had not already been inquired into, the Commissioner would not open an investigation.”

Mine continued: “I am afraid I am unable to say what the police meant by their comments,” referring to my complaint to the Metropolitan Police and the strange response that it was being investigated elsewhere.

My first reaction was: How much evidence does the commissioner need? If he’s a villain, he’s hardly likely to sign a confession! We know Osborne claimed against his mortgage on the property in Cheshire and we know that the mortgage was for three land titles, not one. Therefore we deduce that he claimed money for Parliamentary duties taking place on at least two pieces of land where such duties could never have taken place, and the prima facie evidence (as the police would say) suggests further investigation is required.

Do we even have proof that Osborne ever actually used the Cheshire farmhouse to carry out Parliamentary duties? Whenever I have claimed expenses for a job, I have always had to produce proof of it. How has he used that house? When did he use that house? Where is the proof? If he met constituents, my understanding is that he used the Conservative office in the same building as the local Conservative Club (which is to close through lack of funding; interesting that Osborne is making out like a bandit while his local party suffers). Could he have travelled up from London, held those meetings, and travelled back within the same day? If so, then the farmhouse and the two pieces of land are now looking increasingly like long-term investments, maintained at cost to the taxpayer, that were to be sold at a later date for huge profit (as, in fact, they were).

Second reaction was: If the Parliamentary Standards Commissioner cannot investigate an open-and-shut fraud case (which is what this is) then what is the point of the office as it currently stands? On balance, it seems likely that Members of Parliament can continue to commit abuses of public money – and trust – and get away, free as a bird, in the current system. Therefore, with this decision it seems the commissioner, who only took up the post this month, is attempting a tacit resignation from it.

Let’s have a standards watchdog that actually investigates and prevents abuses, shall we? Maybe I’ll start an e-petition.

Third reaction was: Without a full and frank investigation, Osborne will always stand accused of expenses fraud and of abusing the trust placed in him as a member of Parliament. So, in fact, the commissioner has done him a great disservice. Mud always sticks, as the old saying goes. There’s no smoke without fire.

There’s no stink without a stinker, and in this case the odour can emanate from nobody else but Osborne.

He’ll never be able to live it down. And he’ll never be able to say that nobody raised the issue, because we have.

I think I might have a bit more work to do. For Osborne himself, as Churchill once said, “This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

Osborne update – are they kicking his paddock into the long grass?

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Is the Parliamentary Commissioner for Standards going to let Osborne get away with using taxpayers’ money in a get-rich-quick property scheme, and then pocketing the profits? Only you can make him think again. It seems clear that if he committed fraud he should be jailed.

Efforts to find out exactly why George Osborne was allowed to make up to £1 million by using taxpayers’ money to pay mortgage interest on three properties in Cheshire, while fraudulently claiming he needed it to pay expenses for his use of just one of them for Parliamentary duties, appear to have run into difficulty.

I received this letter from the office of the Parliamentary Commissioner for Standards:

“Thank you for your letter… to the Parliamentary Commissioner for Standards. I have been asked to reply.

“I hope it will be helpful if I explain the role of the Parliamentary Commissioner for Standards. The Commissioner is able to inquire into complaints of a breach of both the Code of Conduct and the rules of the House only if they are supported by sufficient evidence to justify an inquiry.

“Your letter suggests that criminal conduct may have occurred. Any allegations of criminal behaviour would be a matter for the police, not for the Commissioner, and I note that you have reported this matter to them. Any police investigation would take precedence over the Commissioner’s inquiries.”

That’s not good enough, is it?

It makes no mention of what the commissioner is doing about the complaint and merely runs over ground that has been covered already, via email.

I decided to try again, as follows:

“Thank you for your letter… regarding my complaint.

“I notice that you do not mention anywhere in your reply whether the commissioner is going to investigate this matter or not. However you do, helpfully, state that the commissioner is able to inquire into complaints of a breach “if they are supported by sufficient evidence to justify an inquiry”.

“You will know that a previous inquiry was made into the status of Mr Osborne’s former property in Cheshire after concern was raised about his claim for expenses regarding Parliamentary duties he allegedly carried out at a house there.

“This is a separate complaint.

“As you will know from my previous letter, Mr Osborne claimed expenses, not only for the house but for two other land titles which were also part of his mortgage. These pieces of land could not have anything to do with his Parliamentary business and yet his claim included them. Therefore, his claim was fraudulent – he was stating that it was for one thing – Parliamentary duties – when in fact it was for another – to pay off, at the taxpayers’ expense, a mortgage he had taken out for a considerable amount of money. We have subsequently discovered that Mr Osborne has sold all three properties for an amount that could be more than double the price he originally paid for them – up to £1 million – and kept the entire amount. I have provided ample evidence to support the above statements.

“This is a scandalous matter. A member of the Cabinet – the Chancellor of the Exchequer, no less! – diverting taxpayers’ money under false pretences in order to gain a pecuniary advantage of up to £1 million. And at a time when millions of people are having to make the choice between staying warm and eating!

“It may interest you to know that many right-thinking citizens of the UK are also scandalised by this matter and wish to see it resolved and justice done. Articles I have written have attracted the support of around 5,000 readers and they all want to know what will be done about this. I appreciate that, in the context of a nation of 60 million people, 5,000 is not a great number. However you should bear in mind that I occupy only a very small corner of the UK’s media. If my platform had been more high-profile, you can be assured that many more people would be calling for justice in this matter.

“You also refer to the fact that I have reported this matter to the police. This is true. But I must inform you that I received a strange telephone call from the Metropolitan Police, stating that they could not investigate the matter directly as an investigation was already in progress, being handled by others. They declined to explain what they meant. Can you tell me what they meant? I wrote to my MP, seeking clarification, but he has not yet responded.

“Taken as a whole, and writing as a right-thinking person myself, I have to wonder whether attempts are being made to obscure this matter – cover it up, hide it away. Your letter is a case in point. Why do you not tell me outright what the commissioner has decided?

“It all seems very suspicious to me.”

Does anyone feel like supporting this complaint? Just email standardscommissioner@parliament.uk and say you are aware a complaint has been made about George Osborne’s expenses claims for the property in Cheshire he recently sold, and that you wish to know when the inquiry will be set up and how matters are progressing. If enough people shout about it, maybe they’ll shift.  

Osborne update: Information sent to Standards Commissioner

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He thinks he can get away with using taxpayers’ money in a get-rich-quick property scheme, and then pocketing the profits. It seems clear that he committed fraud. He should be jailed.

Dear ——- —-,

Thank you for your email of December 20, and for replying to my complaint about Rt Hon George Osborne MP so promptly.

Herewith please find copies of Land Registry documents relating to the properties in question. These may be obtained from the Land Registry on request. It is clear from them that both properties were owned by Mr Osborne and were sold together – as a single transaction – to the new owners. Under those circumstances it is unreasonable to expect that the valuation of £445,000, which appears on both documents for the period when Mr Osborne owned those properties, relates to those properties individually; it is the value of both properties, taken together. That is how Mr Osborne bought them, and it is how he sold them. It is unreasonable to expect anyone to believe there are separate valuations for the land and the building.

It must follow, therefore, that Mr Osborne’s claim for mortgage expenses towards use of the building in the pursuance of his Parliamentary duties also went towards payment of mortgage expenses on the paddock, and I understand it is now a belief that is widely held by the public, that Mr Osborne did not spend a single penny of his own money on the mortgage for the properties in question.

There are questions that I cannot answer for you. I do not hold details of the single mortgage he held, that covered both the land west of Macclesfield Road (the paddock) and at Harrop Fold Farm – that would be a private document and its details would be a matter for him to divulge. Therefore I cannot say for certain whether he claimed for all of the mortgage interest or just a percentage covering the house. As a reasonable man, however, I can say that it seems unlikely he would put forward an arbitrary figure – and how would he know the correct valuation for the building alone, when he bought it and the paddock as a single package?

You rightly state that the Commissioner has already inquired into Mr Osborne’s claims for his second home over the relevant period. The only conclusion I can draw from this, in the light of the above information, is that Mr Osborne may have misled the Commissioner about the true nature of his mortgage interest payments. I would imagine this is a serious offence against the Commissioner’s office; if it is not, I am sure that the general public would be as shocked as I would.

Bear in mind also that the sum of money concerned in this affair is around £1 million. This is not a paltry amount and, if the taxpayers of the UK have been unwittingly subsidising a profit-making scheme for this man, it would be unreasonable to deny them knowledge of the matter and recompense for the misuse of their tax pounds.

Thank you for your attention in this matter. I look forward to receiving your response. I understand that your office would not, in any case, proceed with an investigation without a written complaint, so I will put the necessary documents in the post at my earliest convenience.